ACH vs. Wire Transfer: What’s the Difference?

What Is an ACH Transfer?

An ACH transfer refers to money being transferred from one bank to another by a third party. It is often used to process direct payments or direct deposits.

ACH transfers are based on the automated clearing house network, which includes about 10,000 financial institutions in the U.S. The ACH network can be used to process transactions such as direct debits, direct deposits, direct payments, electronic checks (eChecks) and electronic fund transfers (EFTs).

There are several scenarios in which consumers or business owners might want to use an ACH transfer for direct payments (ACH debit transactions) or direct deposits (ACH credit transactions):

• Payroll: If you're a business owner paying your employees
• Paying vendors: If you're a business owner paying vendors
• Bill paying: If you're paying companies you owe money to, directly from your bank's website
• Transferring money to friends or family: If you want to send money to a family member or friend
• Transferring money between your accounts: If you have accounts at more than one bank and want to transfer money from one bank to another

Often, ACH transfers take one to three days if there are sufficient funds in the account from which the money is being debited. Transactions can take longer, though, under certain circumstances, such as if the system detects a potentially fraudulent transaction. ACH transfers are typically free of charge, though they may require a small fee for expedited transfers.

Learn more:What Is Direct Deposit?

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What Is a Wire Transfer?

A wire transfer is an electronic money transfer from one financial institution directly to another, without a third party. This method is often used to transfer money for a same-day arrival, but the expedited service comes at a premium. Fees run the gamut because banks can choose how much to charge, subject to any state restrictions.

There are two types of wire transfers: domestic and international. International transfers are also called remittance transfers, international wires or international money transfers, and must be for more than $15 when sent from the United States to another country.

There are two main scenarios in which consumers or business owners might want to use a wire transfer instead of an ACH transfer:

• International payments: If you're sending money to family or friends in another country, a wire transfer allows currency exchange if necessary.
• Time is of the essence: An ACH transfer generally takes a day or two before money is deposited in the receiving bank account. With a wire transfer, the money may show up in the recipient's bank account the same day, and sometimes even instantly, especially if it's a domestic wire transfer.

It's not uncommon for consumers to use wire transfers to make hefty one-time payments that require same-day processing for transactions related to real estate. But be mindful that same-day limits on fund transfers may apply.

ACH vs. Wire Transfer

Before you initiate an ACH or wire transfer, it's important to understand how they differ. Consider the following factors when deciding which option is best:

• Availability: ACH transfers and wire transfers can be used for both domestic and international transactions, and most banks offer both options.
• Cost and fees: If you run a business, you may have a small processing fee for handling an ACH transfer. Consumers generally pay either nothing or very little. It's another story with wire transfer fees. Those can range from amounts such as $20 to $50 or even higher—especially for international transfers.
• Transfer speed: An ACH transfer typically takes a few days to process, whereas a wire transfer generally occurs on the same day and sometimes instantly. A wire transfer done internationally may take a few days.
• Security and fraud: Mistakes and fraud can occur with financial institutions that handle wire and ACH transfers. While ACH transfers can be stopped, wire transfers work much more quickly and are final once the funds are received.
• Reversals: If you find that you need to cancel an ACH transfer, you can usually do it within the same day—although if it's for over $25,000, it may take a little longer. Wire transfers sometimes can't be stopped, which is why it's best to only wire money if you are absolutely certain whoever is on the other end is trustworthy and reputable.
• Transfer limits: Daily transfer limits apply for both ACH and wire transfers. Check with your bank or credit union to find out what their transfer limits are for each. Consumers and businesses are generally limited to $1 million in ACH transfers. Limits for wire transfers tend to be high, but they vary by bank.

Should You Choose an ACH Transfer or a Wire Transfer?

Now that you know the difference between ACH and wire transfers, how do you decide which one to use? It usually comes down to timing, cost and the nature of your transaction.

When to Choose an ACH Transfer

• You're making a non-urgent payment. If speed isn't a priority, ACH is a reliable and affordable choice. It works well for scheduled bills, payroll and routine transfers.
• You want to save money. Most ACH transfers are free or cost just a few dollars. That makes them ideal for everyday use or recurring payments.
• You're paying a business or vendor. ACH is commonly used for vendor invoices and service payments. It can also be automated for regular billing cycles.
• You're transferring money between your own accounts. Whether you're moving money from checking to savings or between different banks, ACH transfers are an easy way to do it. The delay is usually minimal unless it's a weekend or holiday.
• You want reversal options. ACH transfers often come with the ability to reverse a payment within the same business day. This can offer extra peace of mind in case something goes wrong.
• You're sending money within the U.S. Domestic ACH transfers are widely accepted and easy to initiate through online banking platforms. International ACH is available, but is less common and slower.

When to Choose a Wire Transfer

• You're making a time-sensitive payment. Wire transfers are often completed the same day, making them ideal for closing deadlines or urgent bills. Domestic wires can even arrive within minutes.
• You're sending a large sum of money. If you're moving thousands (or hundreds of thousands) of dollars, wire transfers are built for high-value transactions. Banks may even allow higher limits than they do for ACH transfers.
• You're sending money internationally. Wire transfers are typically the fastest and most reliable way to send money abroad. They also handle currency conversion, which ACH transfers often don't support as efficiently.
• You need guaranteed delivery. Wire transfers go directly from one bank to another without passing through a middleman. That direct connection reduces delays and failed transfers.
• You're making a real estate transaction. Wire transfers are standard in large financial transactions, such as closing on a home, because of their speed and security.
• You need confirmation of receipt. Wire transfers offer immediate proof that funds were sent and received. This can be important in business deals or time-sensitive purchases.

Frequently Asked Questions

The Bottom Line

If you're torn between an ACH or a wire transfer, consider the processing time and fees. ACH transfers take a bit longer to process, but they are usually free or at least low cost. They're also ideal if you're looking for a convenient way to pay bills from your bank electronically. But if you need the funds to arrive the same day or make a cross-border payment, a wire transfer is likely the best option.